Now that Qualcomm Inc. (QCOM) has done the expected and rejected Broadcom Ltd.'s (AVGO) $70-per-share buyout offer as insufficient, the real drama can begin.

Qualcomm and Broadcom each have a number of options both for strengthening their bargaining positions and for defending their respective stances before investors and other relevant parties. But with Qualcomm shares now trading less than $4 below Broadcom's offer price, markets are increasingly betting Broadcom will be able to strike some kind of deal. And they have some good reasons for thinking that.

A week after Broadcom formally offered to buy Qualcomm for $60 per share in cash and $10 per share in stock, Qualcomm declared its board "has concluded that Broadcom's proposal dramatically undervalues Qualcomm and comes with significant regulatory uncertainty." The company added it's "highly confident" that management's current strategy "provides far superior value to Qualcomm shareholders than the proposed offer."

Some Qualcomm shareholders will probably beg to differ with the latter claim. Though below the levels Qualcomm traded at in 2014 and early 2015, Broadcom's offer price represents a 27% premium to where Qualcomm closed the day before the first reports of an offer came out.

Worries about Qualcomm's various patent-licensing disputes have weighed heavily on shares, and decisions by Apple Inc. (AAPL) and an unnamed licensee to stop paying royalties on phone sales have begun taking a big toll on the company's bottom line. And shortly before Broadcom's offer arrived, Qualcomm shares were hit by a report that Apple is hatching plans to not use its modems within iPhones and iPads launched in 2018.

Qualcomm could justifiably claim that Broadcom's bid is an opportunistic one that aims to take advantage of the company's recent woes to buy it on the cheap. It could also argue that at $70 per share, Broadcom would be paying a very low multiple relative to Qualcomm's future earnings power, should it favorably resolve its licensing disputes and close its pending $47 billion acquisition of NXP Semiconductors NV (NXPI) .

But in the absence of real progress towards resolving the licensing disputes, the first claim will largely fall on deaf ears. And though the second one could lead many Qualcomm investors to argue Broadcom should raise its bid, few are likely to say it justifies spurning Broadcom's overtures altogether. That's especially true since the Qualcomm/NXP deal remains in limbo due to demands by NXP investors for a higher buyout price; for this reason, NXP currently trades nearly $6 above the deal price.

All of that increases the pressure on Qualcomm to resolve the disputes and close the NXP deal quickly. Ending the disputes will likely be tough to pull off, both due to the scope of Qualcomm's legal battles and due to the hard-line stance Apple has taken on iPhone royalty payments. But if Qualcomm is able to appease NXP investors by offering, say, $120 or $125 per share, up from the current $110, investors would likely applaud the move -- both because the deal (paid in large part via offshore cash) would still be very accretive at those levels, and because closing it would remove one of the big uncertainties surrounding Qualcomm's story.

And if Qualcomm was to buy NXP at a higher price, it just might make Broadcom think twice about its bid. As it is, there are questions surrounding Broadcom's ability to finance a Qualcomm deal that also includes NXP, given that it would cost $130 billion after accounting for net debt, even at the current offer levels. Broadcom has said it's committed to acquiring Qualcomm should the NXP deal happen at its current price, but has said nothing about what it would do if Qualcomm buys NXP at a higher price.

Broadcom, for its part, was reported on Nov. 6 to be planning to respond to a Qualcomm rejection of its initial bid by appealing to Qualcomm shareholders and waging a proxy war for control of Qualcomm's board. As The Deal's Ron Orol observes, Broadcom has until Dec. 8 to nominate a director slate for election at Qualcomm's 2018 annual meeting (expected to be held in March), and would likely need to have a majority of Qualcomm's board consist of allied directors to guarantee the board will sign off on a deal.

Such a goal looks daunting on paper. But if there's a strong likelihood that Qualcomm's shares would fall back into the fifties if Broadcom's bid is pulled, then Qualcomm shareholders are likely to give Broadcom's sales pitch a close look -- particularly if Broadcom ups its offer or investors feel that Broadcom could be made to up its offer in talks.

Simultaneously, Broadcom has some options for appeasing antitrust regulators and major customers that are likely to look warily upon a deal. Among other things, the company could offer to unload Qualcomm's Wi-Fi/Bluetooth/GPS connectivity chip business, which has a lot of overlap with Broadcom's. It could also offer to divest Qualcomm's stake in an RF chip joint venture with Japan's TDK. Such asset sales, of course, would also make a deal a little easier to pay for.

And to win over big mobile OEMs that are likely worried about how dependent they would be on Broadcom should it acquire Qualcomm, Broadcom could offer more favorable licensing deals than what they've been getting from Qualcomm to date, perhaps as part of deals that also feature commitments to buy Broadcom and Qualcomm's chips.

On a recent conference call held by Bernstein, Broadcom CEO Hock Tan said he sees opportunities to "rationalize and restructure" a Qualcomm licensing business that he feels is angering customers. Given a Qualcomm deal could be highly accretive to Broadcom even with sizable royalty discounts -- particularly in light of the billions in cost synergies the company can probably obtain -- Broadcom could simply view those discounts as the price of doing business.

It's pretty unlikely that the Broadcom-Qualcomm battle will be resolved quickly. The maneuvering options possessed by each firm, together with the fact that Qualcomm's next annual meeting is probably several months away, make a drawn-out battle likely.

But until Qualcomm puts to rest some of the big worries that have weighed on its shares, or until investors begin to seriously doubt Broadcom's ability to pay for a deal, investors will bet the odds of a deal eventually happening are fairly high.